Asian markets came under pressure on Tuesday after U.S. stocks pulled in a mixed performance.
Weak quarterly earningsfrom Bank of America and news that National City is close to receiving a capital infusion of up to $7 billion, rekindled concerns about the credit crisis and reminded how U.S. consumers are struggling to make payments.
Asian investors saw this as a good reason to cash-in on the region's recent gains with financials topping the sell list. Mitsubishi UFJ Financial declined more than 2 percent, Mizuho Financial lost 4.7 percent while Australia's Allco Finance tumbled 4.2 percent.
This led the Nikkei 225 Average to close more than 1 percent lower, while the broader Topix lost 1.5 percent or 20 points to end at 1,311. Australia's benchmark S&P/ASX 200 finished 0.6 percent or 35 points lower at 5,564.
But a rise in energy stocks cushioned the losses after NYMEX crude approached a new all-time high of $118 a barrel. Inpex Holdings closed 0.8 percent higher while PetroChina climbed 5.1 percent.
South Korea's KOSPI remained below the 1,800 mark, losing 0.7 percent at the finish line. This followed news of Samsung Group's chairman's resignation, a week after he was indicted for tax evasion and breach of trust. Shares of most Samsung units traded lower on Tuesday. Samsung Fire & Marine dropped 3.3 percent while Samsung Securities plunged 4.8 percent as their chief executives also stepped down for the same reason.
Japan's largest brokerage Nomura Holdings was among the decliners, giving up 2.5 percent on news that several of its employees are under investigation on suspicion of insider trading.
Steelmakers also lost ground on Tuesday following a report in the Nikkei that said Nippon Steel plans to ask automakers and other customers to accept a nearly 40 percent hike in prices for its mainstay steel products to offset soaring raw materials prices. Nippon Steel shares fell 3.1 percent while rival Kobe Steel lost 1.6 percent at the close.
In Hong Kong, PC-maker Lenovo Group was one of the main decliners after IBM sold $83.6 million worth of the Chinese firm's shares at a 6 percent discount to Monday's closing price of HK$5.61. Lenovo's stock fell more than 5 percent on Tuesday. The Hang Seng Index closed 0.9 percent higher at 24939.15.
Investors showed no mercy to China Mobile, selling the stock even after the mainland's largest operator posted a 37 percent jump in quarterly profit. The result was slightly below what analysts were expecting.
But the Shanghai Composite Index bounced back into positive territory after hitting a 13-month low. The index rose 1 percent to 3147.79.
In South-east Asia, Singapore's Straits Times Index gained 0.6 percent while Malaysia's KLSE closed flat.